Alabama 2025 Regular Session

Alabama House Bill HB230 Compare Versions

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1	1	HB230INTRODUCED
2	2	Page 0
3	3	HB230
4	4	GMSP226-1
5	5	By Representative Shedd
6	6	RFD: Commerce and Small Business
7	7	First Read: 06-Feb-25
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12	12	5 GMSP226-1 02/6/2025 TRP (L)bm 2025-152
13	13	Page 1
14	14	First Read: 06-Feb-25
15	15	SYNOPSIS:
16	16	Under existing law, a licensee of a real estate
17	17	transaction must provide a written disclosure form to a
18	18	consumer describing the types of brokerage services, as
19	19	required by the Real Estate Consumers Agency and
20	20	Disclosure Act (RECAD), prior to a consumer disclosing
21	21	any confidential information. This form is adopted by
22	22	the Alabama Real Estate Commission. In addition, a
23	23	licensee must inform the consumer of the brokerage
24	24	services specifically provided by the licensee's
25	25	company. A written agreement is required to establish
26	26	an agency relationship but is not required to establish
27	27	a transaction brokerage relationship.
28	28	Pursuant to the National Association of Realtors
29	29	(NAR) settlement agreement approved by the U.S.
30	30	District Court for the Western District of Missouri,
31	31	NAR created a new rule requiring brokers working with
32	32	prospective buyers to enter into a written agreement
33	33	with the prospective buyer prior to the prospective
34	34	buyer touring a home. This requirement conflicts with
35	35	existing law.
36	36	In response to recent changes in industry
37	37	practices, this bill would provide that a consumer must
38	38	receive a disclosure form from the licensee prior to a
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66	66	28 HB230 INTRODUCED
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68	68	receive a disclosure form from the licensee prior to a
69	69	real estate licensee showing him or her a property; and
70	70	the disclosure of the specific brokerage services the
71	71	licensee's company provides must be in writing and
72	72	include general information related to compensation of
73	73	the licensee.
74	74	This bill would provide that after the
75	75	disclosure, a consumer retains the option to enter into
76	76	a brokerage agreement with the brokerage company;
77	77	however, the consumer is not required to enter into a
78	78	written brokerage agreement as a prerequisite to the
79	79	licensee showing him or her a property.
80	80	This bill would further provide that a licensee
81	81	and consumer are only required to execute a written
82	82	brokerage agreement if the licensee will either list
83	83	the property for sale or submit an offer to a seller on
84	84	behalf of the consumer; and any brokerage agreement
85	85	entered into must provide terms of compensation to the
86	86	licensee and company.
87	87	This bill would further provide that a referral
88	88	agreement between real estate licensees must be in
89	89	writing.
90	90	A BILL
91	91	TO BE ENTITLED
92	92	AN ACT
93	93	Relating to real estate transactions; to clarify when a
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123	123	Relating to real estate transactions; to clarify when a
124	124	real estate consumer agency disclosure form is required; to
125	125	further clarify when a written brokerage agreement is required
126	126	to establish a brokerage relationship; and to provide when a
127	127	licensee referral agreement must be in writing.
128	128	BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
129	129	Section 1. Sections 34-27-81, 34-27-82, and 34-27-100
130	130	Code of Alabama 1975, are amended to read as follows:
131	131	"§34-27-81
132	132	As used in this article, the following words shall have
133	133	the following meanings:
134	134	(1) AGENCY AGREEMENT. A written agreement between a
135	135	broker and a client which creates a fiduciary relationship
136	136	between the broker and a principal, who is commonly referred
137	137	to as a clientthe client.
138	138	(2) BROKER. Any person licensed as a real estate broker
139	139	pursuant to Articles 1 and 2 of this chapter.
140	140	(3) BROKERAGE AGREEMENT. A specific written agreement
141	141	between a brokerage firmcompany as defined in Section 34-27-2
142	142	and a consumer which establishes a brokerage relationship. The
143	143	brokerage agreement shall contain a statement of the terms and
144	144	conditions of the brokerage services to be provided , including
145	145	any compensation to be paid to or through the company. The
146	146	term includes agency agreements and transaction brokerage
147	147	agreements.
148	148	(4) BROKERAGE SERVICE. Any service, except for rental
149	149	or property management services, provided by a broker or
150	150	licensee to another person and includes all activities for
151	151	which a real estate license is required under Articles 1 and 2
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181	181	which a real estate license is required under Articles 1 and 2
182	182	of this chapter.
183	183	(5) CONSUMER. A person who obtains information, advice,
184	184	or services concerning real estate from a real estate
185	185	licensee.CLIENT. A person who has an agency agreement with a
186	186	broker for brokerage services whether he or she is the buyer
187	187	or seller.
188	188	(6) CLIENT. A person who has an agency agreement with a
189	189	broker for brokerage service, whether he or she be buyer or
190	190	seller.CONSUMER. A person who obtains information, advice, or
191	191	services concerning real estate from a real estate licensee.
192	192	(7) CUSTOMER. A person who is provided brokerage
193	193	services by a broker or licensee but who is not a client of
194	194	the broker.
195	195	(8) DUAL AGENCY. An agency relationship in which the
196	196	same brokerage firm represents both the seller and the buyer
197	197	in the same real estate transaction .once all parties have
198	198	signed the consent agreement. Circumstances whichthat
199	199	establish a dual agency include, but are not limited to, one
200	200	of the following:
201	201	a. When two or more licensees licensed under the same
202	202	broker each represent a different party to the transaction.
203	203	b. When one licensee represents both the buyer and
204	204	seller in a real estate transaction.
205	205	(9) INFORMED CONSENT. A consumer's agreement to allow
206	206	something to happen which is based upon full disclosure of
207	207	facts needed to choose appropriate brokerage services.
208	208	(10) LICENSEE. Any broker, salesperson, or company as
209	209	defined in Section 34-27-2 .
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239	239	defined in Section 34-27-2 .
240	240	(11) LIMITED CONSENSUAL DUAL AGENT. A licensee who,
241	241	with the written informed consent of all parties to a
242	242	contemplated real estate transaction, is engaged as an agent
243	243	for both the buyer and seller. Circumstances which establish
244	244	dual agency include, but are not limited to, one of the
245	245	following:
246	246	a. When two or more licensees licensed under the same
247	247	broker each represent a different party to the transaction.
248	248	b. When one licensee represents both the buyer and
249	249	seller in a real estate transaction.
250	250	(12) MATERIAL FACT. A fact that is of significance to a
251	251	reasonable party which affects the party's decision to enter
252	252	into a real estate contract.
253	253	(13) QUALIFYING BROKER. A broker under whom a
254	254	corporation, partnership, branch office, or lawfully
255	255	constituted business organization, as the Legislature may from
256	256	time to time provide, is licensed, or a broker licensed to do
257	257	business as a sole proprietorship who is responsible for
258	258	supervising the acts of the company , or proprietorship and all
259	259	real estate licensees licensed therewith.
260	260	(14) REAL ESTATE TRANSACTION. The purchase, sale, lease
261	261	and rental, option, or exchange of an interest in real estate.
262	262	(15) SINGLE AGENT. A licensee who is engaged by and
263	263	represents only one party in a real estate transaction. A
264	264	single agent includes, but is not limited to, one may be only
265	265	one of the following:
266	266	a. Buyer's agent, which means a broker or licensee who
267	267	is engaged by and represents only the buyer in a real estate
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297	297	is engaged by and represents only the buyer in a real estate
298	298	transaction.
299	299	b. Seller's agent, which means a broker or licensee who
300	300	is engaged by and represents only the seller in a real estate
301	301	transaction.
302	302	(16) SUB-AGENT. A licensee who is empowered to act for
303	303	another broker in performing real estate brokerage tasks for a
304	304	principal, and who owes the same duties to the principal as
305	305	the agent of the principal.
306	306	(17) TRANSACTION BROKER. A licensee who assists one or
307	307	more parties in a contemplated real estate transaction without
308	308	being an agent or fiduciary or advocate for the interest of
309	309	that party to a transaction."
310	310	"§34-27-82
311	311	(a) When engaged in any real estate transaction, the
312	312	licensee may act as a single agent, sub-agent, a limited
313	313	consensual dual agent, or as a transaction broker.
314	314	(b) At the initial contact between a licensee and the
315	315	consumer and until such time a broker enters into a specific
316	316	written agreement to establish an agency relationship with one
317	317	or more of the parties to a transaction, the licensee shall
318	318	not be considered an agent of that consumer. An agency
319	319	relationship shall not be assumed, implied, or created without
320	320	a written bilateral agency agreement establishing the terms of
321	321	the agency relationship. In the absence of a signed brokerage
322	322	agreement between the parties, the transaction brokerage
323	323	relationship shall remain in effect.
324	324	(c) As soon as reasonably possible and before any
325	325	confidential information is disclosed to any other person by a
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355	355	confidential information is disclosed to any other person by a
356	356	licensee, theThe licensee shall provide a written disclosure
357	357	form to a consumer for signature describing the alternative
358	358	types of brokerage services, as identified in subsection (a),
359	359	that are available to clients and customers of real estate
360	360	brokerage companies , as soon as reasonably possible and before
361	361	any confidential information is disclosed to any other person
362	362	by a licensee. Such disclosure must occur at least prior to a
363	363	licensee providing any brokerage service, which includes a
364	364	licensee showing a property as to a prospective buyer but does
365	365	not include a seller's agent conducting an open house as to
366	366	prospective buyers. As part of the disclosure, Thethe licensee
367	367	shall also provideinform a consumer as toin writing the
368	368	specific types of brokerage services that are provided by his
369	369	or her company, as required by Section 34-27-83, which shall
370	370	also include general information on how the company and
371	371	licensee are compensated for the brokerage services . A broker
372	372	shall not be required to offer or engage in any one or in all
373	373	of the alternative brokerage arrangementsservices specified in
374	374	subsection (a). The licensee will provide a written form to
375	375	the consumer for their signature describing the alternative
376	376	types of brokerage arrangements available. All rental or
377	377	property management services are excluded from the
378	378	requirements of this subsection.
379	379	(d) A licensee shall not be required to comply with the
380	380	provisions of subsection (c) when engaged in transactions with
381	381	any corporation, non-profitnonprofit corporation, professional
382	382	corporation, professional association, limited liability
383	383	company, partnership, any partnership created under the
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413	413	company, partnership, any partnership created under the
414	414	Uniform Partnership Act ,(commencing at Section 10-8A-101 ),
415	415	real estate investment trust, business trust, charitable
416	416	trust, family trust, or any governmental entity in
417	417	transactions involving real estate.
418	418	(e) After disclosure, the consumer may make an
419	419	affirmative election of a specific type of brokerage
420	420	arrangementservice that is available from the real estate
421	421	brokerage company by signing a brokerage agreement . The
422	422	brokerage agreement shall contain a statement of the terms and
423	423	conditions of the brokerage services that the company will
424	424	provide, as provided in Section 34-27-81. The consumer or
425	425	customer may not be required to enter into a written brokerage
426	426	agreement in order for a licensee to show a property to the
427	427	consumer or customer. Notwithstanding the application of
428	428	subsection (d), a written brokerage agreement is required
429	429	prior to a licensee either listing for sale or submitting an
430	430	offer on a property on behalf of a consumer, customer, or
431	431	client for compensation. In the absence of a signed brokerage
432	432	agreement between the parties, the transaction brokerage
433	433	relationship shall remain in effect.
434	434	(f) When serving as a transaction broker, the duties of
435	435	the licensee to all the parties to a real estate transaction
436	436	are limited to those which are enumerated in Section 34-27-84.
437	437	A signed brokerage agreement between the parties or, in the
438	438	absence of a signed brokerage agreement, the continuation of
439	439	the transaction brokerage relationship, shall constitute
440	440	informed consent by the consumer as to the services the
441	441	consumer shall receive from the broker.
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471	471	consumer shall receive from the broker.
472	472	(g) Disclosure forms shall be provided to buyers and
473	473	sellers. All real estate brokerage firmscompanies operating
474	474	within the State of Alabama shall use the same agency
475	475	disclosure forms. Disclosure forms describing the alternative
476	476	types of brokerage services identified above shall be written
477	477	by the Alabama Real Estate Commission.
478	478	(h) Nothing in this section shall prohibit the consumer
479	479	from entering into a written contract with a broker which
480	480	contains provisions for services not specifically identified
481	481	in the written disclosure form."
482	482	"§34-27-100
483	483	For the purposes of this article, the following terms
484	484	shall have the following meanings:
485	485	(1) ACTUAL INTRODUCTION. a. WhenEither: (i) when the
486	486	buyer, seller, landlord, or tenant has been referred to the
487	487	real estate licensee by the person or entity seeking the
488	488	referral fee prior to the time the customer has executed a
489	489	real estate brokerage services disclosure form or waived
490	490	execution in writing or the customer has executed a buyer's
491	491	agency agreement, property listing agreement, or a transaction
492	492	brokerage agreement; or
493	493	b. For(ii) for real estate transactions in which the
494	494	law of this state does not require the presentation of a real
495	495	estate brokerage services disclosure form, when the buyer,
496	496	seller, landlord, or tenant has been referred to the real
497	497	estate licensee by the person or entity seeking the referral
498	498	fee prior to any contact between the buyer, seller, landlord,
499	499	or tenant and the real estate licensee during which their real
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529	529	or tenant and the real estate licensee during which their real
530	530	estate business has been discussed . Any such referral
531	531	agreement between real estate licensees must be in writing.
532	532	Any attempt to present an unlawful referral agreement is
533	533	prohibited.
534	534	(2) INTERFERENCE WITH A REAL ESTATE BROKERAGE
535	535	RELATIONSHIP. Demanding a referral fee from a real estate
536	536	licensee when reasonable cause for payment does not exist. The
537	537	term "interference with a real estate brokerage relationship"
538	538	may also include a threat by a third party to reduce,
539	539	withhold, or eliminate any relocation or other benefits, or
540	540	the actual reduction, withholding, or elimination of any
541	541	relocation or other benefit, in order to generate a referral
542	542	fee from a real estate broker when reasonable cause for
543	543	payment does not exist. Notwithstanding the foregoing, either
544	544	neither of the following shall not constitute interference
545	545	with a real estate brokerage relationship:
546	546	a. Communications between an employer or its
547	547	representative and an employee concerning relocation policies
548	548	and benefits.
549	549	b. Advising a party of the right to allow a brokerage
550	550	relationship to expire pursuant to its own terms or not to
551	551	renew the brokerage relationship upon expiration.
552	552	(3) REAL ESTATE BROKERAGE RELATIONSHIP. A relationship
553	553	entered into between a real estate broker or salesperson and a
554	554	buyer, seller, landlord, or tenant under which the real estate
555	555	broker or salesperson engages in any of the acts set forth in
556	556	Alabama real estate license law, but the relationship does not
557	557	exist prior to actual introduction of the relationship as
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587	587	exist prior to actual introduction of the relationship as
588	588	provided in subdivision (1).
589	589	(4) REASONABLE CAUSE FOR PAYMENT. When an actual
590	590	introduction of business has been made, a subagency
591	591	relationship between brokers exists, a contractual referral
592	592	fee relationship or other agreement exists, or a contractual
593	593	cooperative brokerage relationship exists.
594	594	(5) REFERRAL FEE. Any fee or commission paid by a real
595	595	estate licensee to any person or entity, other than a
596	596	cooperative commission offered by a listing real estate broker
597	597	to a selling real estate broker or by a selling real estate
598	598	broker to a listing real estate broker."
599	599	Section 2. This act shall become effective 30 days
600	600	after the enactment of this bill.
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